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March 14 (Reuters) - The costs to California residents to
meet the ambitious goal of using renewable power for one-third
of the state's electric needs by 2020 are beginning to come
down, according to a state regulatory report.

But utility customers will face higher bills first, a
utility executive warned, as costs for early wind and solar
projects now operating are passed along to customers.

California's Renewables Portfolio Standard (RPS) program
requires investor-owned utilities to increase reliance on
renewable energy resources to 33 percent of total resources by
2020 as part of the state's effort to reduce greenhouse gas
emissions to 1990 levels.

Overall, the state's top three utilities served 19.8 percent
of their 2012 load with renewable resources, up from 17 percent
in late 2011.

"California is on track to meet its interim requirement of
25 percent renewables by 2016, and is well-positioned to meet 33
percent by 2020," the California Public Utilities Commission
(CPUC) said in one of several renewable updates prepared for the
state legislature.

At the end of last year, PG&E Corp's Pacific Gas and
Electric Co served 19 percent of its 2012 retail sales with
renewable energy, up from 17.7 percent earlier in the year.

Adjusted average prices in renewable contracts has declined
from the program's early years, the agency said, easing to about
9.6 cents per kilowatt-hour for all contracts approved in 2012,
down from 12.6 cents per kWh in 2011.

But California customers are just starting to see the
effects of the costlier contracts on monthly bills as those
renewable projects begin producing for the grid, Anthony Earley,
chief executive of PG&E Corp said in comments at an energy
conference last week in Houston.

"Some of the early contracts were very expensive and those
projects are just now coming online," Earley said.

For customers of PG&E, the state's largest utility,
renewable power will likely add 1 percent to 1.5 percent to
utility bills, over any inflation-related cost increase, he
said.

Earley said some long-term contracts the utility signed for
renewable resources were above $200 per megawatt-hour. Those
projects are now being completed and costs for the power will
begin showing up on customer bills.